Tyco to split into three parts

TRENTON, N.J. - Tyco International Ltd., still recovering from scandals that saw its longtime former chief executive sentenced to prison, said Friday it plans to split into three public companies.

It is separating its electronics and health-care businesses from its remaining operations, which include security and fire-protection services.

The company, which may be best known for its ADT home alarm systems, also warned its first quarter and full-year 2006 earnings from continuing operations would be lower than expected.

It estimated the cost of the breakup, planned for early next year, at $1 billion.

Tyco, which has its operational offices in West Windsor, said the breakup followed an extensive strategic review and will strengthen the businesses.

"We believe that separation is a logical next step in Tyco's evolution," said Chairman and Chief Executive Ed Breen in a morning conference call.

He said the board concluded the current structure was inhibiting growth possibilities of the health care and electronics businesses, both leaders in their respective fields.

In a move expected to be completed in the first quarter of 2007, Tyco will separate the companies through issuing tax-free stock dividends to shareholders, who will own dividend-producing stock in all three companies.

Each of the new companies, still based in Bermuda, will be governed by an independent board of directors who will continue to refine those portfolios with possible selloffs or acquisitions, Breen said.

Tyco has been recovering from accounting scandals first revealed in 2002. Its former CEO and longtime leader, L. Dennis Kozlowski, and former Chief Financial Officer Mark H. Swartz were sentenced to prison last year for grand larceny, conspiracy, securities fraud and falsifying business records, and are appealing their convictions.